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Investors offer tips on where to place your bets for success in 2020

Global investors reveal secret formulas to success and where to invest in 2020

Investors offered advice and shared formulas to success at Startup Village in Moscow recently.

Startup Village took place on 2 and 3 June at Skolkovo Innovation Center, a hub for tech startups in the region that was developed to kick-start the Russian startup economy.

During the open-air festival, investors from around the world shared advice on where to invest and which markets to stay clear of.

Fuyuki Yamaguchi, chief investment officer at Mistletoe Inc, said: “Smartphone gaming already has a lot of companies in the market, but only a few have market share so it would be hard to get something started there.”

Viktor Orlovskiy, senior vice-president of Sberbank, said: “Don’t invest in TV broadcasting or outdoor advertising. Everything related to big data and business intelligence will see growth.”

Vera Shokina, managing director of Silicon Valley Bank, said: “There is never a bad industry for us to invest. Some are on the up again. Sewing, an industry everyone thought was over, is on the up again in digital, so never say never. We’re interested in all startups. You will do well to invest in banking at the moment.”

Mike Butcher, editor at Techcrunch, said: “Don’t invest in photo apps. It’s already dead, no-one cares.”

Kerstin Cooley, CEO of Swedish firm Moor&Moor AB, said: “I agree photo apps are a bad investment. Also connected cities and connected homes – Cisco has the connections there and will buy out the good startups too early, so that’s also not a great place to invest. Areas to invest in include e-commerce, fintech [financial technology], digital advertising, big data, transport and hospitality.

Exit market

Discussing the differences in exit markets, for startups, around the world, Yamaguchi said: “In Japan, startups have not been very successful in the exit market. Looking back over history, the only way has been to [launch an] IPO [initial public offering]. The scene is changing though. To do well in Japan, you have to have innovative tech and you have to brush up on your product.”

Sberbank’s Orlovskiy said it is difficult to exit as a startup based in Russia: “It’s a good thing to think globally, but it’s difficult to find the investment. It’s not just finding investment to get off the ground, but to expand, and it’s hard to find money in Russia.”

Silicon Valley Bank’s Shokina said businesses in California stay private for much longer: “We either buy their shares or lend credit to founders.”

Andrey Zhulin, investment manager at Russia Partners, said: “Startups here in Russia don’t think they can go global.”

In contrast, Moor&Moor’s Cooley said all Swedish companies are “global by birth as the market is so small”.

Advice for startups

Offering advice for startup firms, Orlovskiy, said: “People invest in great teams and great people. You have to be diligent from the very beginning and create a great story.”

Shokina advised that it is important to “pick the right market and know your market. Use networks and you will propel as a startup”.

Zhulin advised startups to make fewer things, but with more focus and strive to solve real market problems. “Sometimes people try to figure out problems that aren’t really there, and their business will fail because there wasn’t a need for it,” said Zhulin.

Butcher advised startups never to look like they want to exit. “Look like you have a great team and a great product, so you might want to come and buy me,” he said.

Cooley’s advice was to “focus focus focus, and never give up – entrepreneurship is a team sport”.

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